SOLVAY GROUP HIGHLIGHTS 2ND QUARTER & 1ST HALF 2016

Brussels, July 29^th, 2016

Q2 2016 results ⁽¹⁾

• Net sales totaled € 2,946 m, down (6)%, as a result of a (4)% net impact of foreign exchange fluctuations on conversion and (2)% price decrease in a context of lower raw material and energy costs. Volumes were up by 1%, with solid growth across segments except Advanced Formulations.
• Underlying EBITDA grew 8% at € 652 m. EBITDA benefitted from sustained pricing power of 3%, while foreign exchange had a (4)% impact on conversion. The Group also benefitted from continuous excellence and Cytec synergy delivery. The underlying EBITDA margin widened to a record 22% of net sales, up 2.9 percentage points.
  • Advanced Materials at € 293 m, up 6.3% yoy, thanks to strength in automotive applications, healthcare and consumer goods, while the smart devices market remained subdued;
  • Advanced Formulations at € 124 m, down (11)% yoy, reflecting persistent weakness in oil & gas;
  • Performance Chemicals at € 224 m, up 20% yoy, thanks to strong volumes in soda ash, and continued recovery in acetate tow;
  • Functional Polymers at € 64 m, up 24% yoy, mainly driven by a higher contribution from RusVinyl;
  • Corporate & Business Services at € (53) m, versus € (50) m in Q2 2015.
• Net income, Solvay share, on an IFRS basis was € 185 m vs € 138 m in 2015. Underlying net income, Solvay share, was € 223 m, up 4%,  with  the higher operating profit more than offsetting the end of contributions from the discontinued European chlorovinyls activities.
• Free cash flow was € 174 m versus € 192 m in Q2 2015. Free cash flow from continuing operations was up € 37 m, thanks to higher EBITDA and stronger focus on cash generation. Contribution from discontinued operations was nil, since the European chlorovinyls was disposed mid 2015.  
• Net debt on an IFRS basis was € (4.8) bn. Underlying net debt⁽²⁾ rose to € (7.0) bn from € (6.8) bn at the start of the quarter, following seasonal interest as well as final dividend payments. The latter includes the perpetual hybrid bonds.

H1 2016 results ⁽¹⁾

• Net sales totaled € 5,877 m, down (6)%, with average prices down (2)% linked to partial pass-through of lower raw material costs. Scope changes and foreign exchange impacts on conversion lowered sales by (1)% and (3)% respectively. Volumes were stable overall, with a decrease in Advanced Formulations offset by growth in the other segments.
• Underlying EBITDA grew 5% at € 1,253 m, as excellence initiatives, synergies and pricing power boosted performance by 6%. The foreign exchange effect on conversion was (2)% negative. Volume mix and scope both had a (1)% impact. The € 30 m one-off benefit recognized in the first quarter of 2015, linked to U.S. post-retirement benefits, was mostly compensated by the growing contribution of the RusVinyl joint venture.
• IFRS net income was € 200 m, vs € 126 m in 2015. Underlying net income, Solvay share, was € 416 m, in line with the € 418 m in H1 2015, as higher operating profit more than compensated for the scope effects in discontinued operations.  
• Free cash flow of € 183 m vs € (166) m, with free cash flow from continuous operations up € 346 m, contributing the bulk of it as a result of higher EBITDA, lower capex and a significant reduction of seasonal working capital needs.

Quote of the CEO, Jean-Pierre Clamadieu
Solvay delivered strong results in the second quarter, with underlying EBITDA up 8% despite continued headwinds in some markets. This reflects the strength and breadth of the portfolio and the continued momentum of our excellence programs. Free cash flow was significantly higher in the first half of 2016, in line with our commitment to convert profits into cash more efficiently. The integration of Cytec is going very well with fast delivery on synergies and we are particularly pleased with our recent award, together with Mubadala, to supply primary structure composite materials to Boeing's 777X program. This represents a strategic milestone for Solvay and positions us well for long-term growth in a key market.

2016 Outlook

Based on current market conditions, Solvay reaffirms its full year 2016 guidance of high single-digit underlying EBITDA growth and free cash flow in excess of € 650 m.

(1) The underlying and IFRS data presented in the highlights compare to unaudited pro forma 2015 figures, as if the Cytec acquisition had taken place on January 1, 2015. The end-of-period balance sheet data compare to the position at the start of the period, which already included Cytec.
(2) Underlying net debt includes the perpetual hybrid bonds, accounted for as equity under IFRS.

FORENOTE

The results of former Cytec are consolidated in the Group's income and cash flow statements since January 1, 2016. Comparative information for the second quarter and 1st half year 2015 is presented on an unaudited pro forma basis as if the acquisition of Cytec had taken place on January 1, 2015.